With Carly Fiorina out of the picture, Hewlett-Packard
It didn't take long for investors to connect the dots. HP confirmed that Hurd would be its new CEO shortly after the market close.
It's a brilliant move for HP, giving the company the freshest breath of optimism that it has been able to inhale in years. If you've been waffling on the sidelines wondering when to buy into HP, this may be the time. Yes, Fiorina was an inspiring chieftain early in her tenure, but when the stock closed out her six-year stint lower than when she first took over the company, that said it all.
Her vision of turning the company into a business services giant never made much of a dent in IBM's
If you can argue one thing in Fiorina's favor, it's this: Even though she failed to concentrate on the company's core printing and imaging business, it never failed her. The flagship subsidiary continued to account for the lion's share of HP's operating profits, while digesting Compaq's proved awkward.
It doesn't take long to realize why Hurd is exactly what HP ordered. Though he has spent a quarter of a century at NCR, he is just 48, and HP will appreciate his cost-cutting, margin-pumping prowess in a major way. NCR's earnings grew fivefold last year in Hurd's first full year as CEO. To get an idea of how well-regarded he is, look at NCR's stock. It fell by 17% yesterday on the news of his departure.
Going from a company with $6 billion in annual sales to HP's lofty $80 billion, Hurd is likely to appreciate playing in a bigger sandbox. And he's unlikely to fall for Fiorina's trap of chasing greener pastures in non-core areas. Of course, Hurd wouldn't mind if HP were valued as richly as IBM and Dell -- on a price-to-sales basis, both of those companies are more than twice as pricey as HP -- he is more likely to roll up his sleeves to make sure that HP gets there the hard way, with sound operating strategies rather than with blind emulation. That's just what HP needs these days.
Some more fresh headlines from the HP camp:
- The company had a challenging first-quarter report earlier this year.
- Carly Fiorina looks over the edge of reason.
- Talk about the new HP CEO over in our Hewlett-Packard discussion board.
Longtime Fool contributor Rick Munarriz did peck out this story on his HP desktop, but he's using a Dell monitor -- so there. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.